Commissioner`s Advisory No. 5 - Arizona Department of Real Estate

Arizona Department of Real Estate
Bulletin
Volume 2015 • Issue 4 Commissioner’s Advisory No. 5
CLOSING STATEMENT
Released November 6, 2015
This Advisory is offered as a guideline for the Designated Broker to determine the Closing Document
that will be required in the Designated Broker’s Closed Transaction file for at least five years from the
date of the Closing of the transaction.
This Advisory is informational only and is not intended as legal advice.
Judy Lowe Commissioner COMMISSIONER’S CORNER Q. What is the Closing Document that will be required in the Designated Broker’s Transaction
file for at least five years from the date of the closing of a transaction?
A. A Closing Statement that conforms to statutory/rule requirements of the Arizona Revised
Statutes, Title 32 and the Arizona Administrative Code, Title 4.
With the implementation of the Federal Government’s Consumer Financial Protection
Bureau TRID (CFPB-TRID) rule and its guidelines, the Arizona Department of Real Estate (ADRE)
has received many questions from the real estate industry regarding the ADRE statutory and rule requirements for the Closing Statement.
Let’s review what the Statutes and Rule indicate.
Definition of “Closing”: “Closing” means the final step of a real estate transaction, such as
when the consideration is paid, all documents relating to the transaction are executed and recorded, or
the deed is delivered or placed in escrow. AAC R4-29-101.
Records to be retained by the Designated Broker: The records required by this section
shall include copies of earnest money receipts, confirming that the earnest money has been handled in
accordance with the transaction, closing statements showing all receipts, disbursements and adjustments, sales contracts and, if applicable, copies of employment agreements. ARS § 32-2151.01 (A);
and
Sales transaction folders shall include: A complete copy of the sales contract, any escrow
account receipt, any closing or settlement statement, and, if applicable, a copy of the escrow instructions, listing agreement, employment agreement and release of escrow monies. ARS § 32-2151.01 (F)
(2) and also, AAC R4-28-802 (C) states, “Transaction Statements.” In addition to the requirements of
ARS § 32-2151.01 and 32-2174, the broker shall retain true copies of all receipts and disbursements, or
copies of the executed and delivered escrow closing statements that evidence all receipts and disbursements in the transaction.
The CFPB-TRID Closing Disclosure (CD) form will not comply with the above, since it is
only delivered to the Buyer/Borrower, and not the Seller, therefore, the CFPB-TRID Closing Disclosure (CD) form should not be held in the Designated Broker’s sales transaction folder as the Closing
Statement.
A final Closing Statement per the Arizona Statutes and Rule must be included in the Designated Brokers closed transaction file.
Commission Disbursements must be authorized by the Designated Broker, and a licensee
cannot accept compensation as a licensee for the performance of real estate activity from any person
other than the licensed broker. ARS § 32-2153 (A) (7).
Definition of “Compensation” means any fee, commission, salary, money or other valuable
consideration for services rendered or to be rendered, as well as the promise of consideration whether
contingent or not. ARS § 32-2101 (16).
COMMISSIONER JUDY LOWE
Page 1
COMMISSIONER’S CONNECTIONS
Commissioner Lowe speaking on a panel at the
October, 2015 “O” Event.
Inside this Edition:
 ARELLO Board of Directors-Commissioner Lowe Re-Appointed
 Electronic Fingerprinting System-Coming Soon!
 Arizona Registrar of Contractors—Licensing Requirements
 The Bank is the Subsequent Developer/Owner?
 National Do Not Call Registry
 Lighting ADRE Purple
 Development Industry Learn & Lunch
 Automatic Renewal of Property Management Agreement
 When Does Good Customer Service Become Property Management?
 Continuing Education (CE) TIPS!
 Home Staging or Property Management
 ADRE Calendar of Events
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Volume 2015 • Issue 4 COMMISSIONER’S CONNECTIONS
Commissioner speaking at a
Solutions Real Estate Office Meeting.
Commissioner Lowe, with the Maricopa
County Hispanic Association of Real Estate
Professionals (HAREP) addressing CFPBTRID from the ADRE perspective on September 16, 2015.
Commissioner Lowe speaking to the
Tucson Association of REALTORS ®
on November 2, 2015.
Commissioner Lowe met the Pinal County Hispanic
Association of Real Estate Professionals (HAREP) on September 23, 2015. It was a “packed house”. Pictured above
with the Board of Directors.
PLANNING A COMPANY EVENT? To stay up-to-date with what’s happening in real estate, and to hear
“What’s Making the Phone Ring at ADRE?,” invite Commissioner Lowe to speak to your group.
For scheduling a potential date, contact Sarah Dobbins, the ADRE Chief of Staff at [email protected] or Louis
Dettorre at [email protected]
Real Estate Bulle n Page 3 Volume 2015 • Issue 4 ARELLO Board of Directors
Real Estate Bulle n Page 4 Volume 2015 • Issue 4 Electronic Fingerprinting System-Coming Soon!
We are pleased to announce that the Arizona Department of Public Safety (DPS) will soon roll
out the Electronic Fingerprint Application System (EFAS) to expedite the Fingerprint Clearance Card Application process.
Fieldprint is the new vendor who has contracted with DPS to administer the electronic fingerprint application process. Fieldprint plans to have at least one location in each county and
over 30 fingerprint locations throughout Arizona beginning this fall or early next year. Fingerprint Clearance Card (FCC) applicants will simply log on to the Fieldprint website at https://
www.fieldprint.com/ to start the process. The online application process will include the following steps to:
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Submit the application for fingerprinting and the FCC
Schedule an appointment at a convenient Fieldprint location
Pay the fingerprinting and FCC application fee by credit card
The electronic system is not only faster, it is more accurate which should help reduce the number of rejected fingerprint cards. Once the prints are scanned, the system automatically sends
the electronic prints to DPS to review and issue the FCC or denial. Applicants will be encouraged to use the new system but may continue to submit the fingerprint card and application
through the existing traditional paper application process. The fee to roll electronic prints will
be built in to the FCC application fee and may even cost less than the traditional process.
Real Estate Bulle n Page 5 Volume 2015 • Issue 4 The Arizona Registrar of Contractors
Licensing Requirements
Just as an individual working unlicensed as a real estate agent negatively
impacts the livelihoods of licensed agents and poses untold financial and safety
risks for the public, contracting work performed by unlicensed entities poses
devastating effects on the safety and welfare of the public and livelihoods of Arizona’s licensed contracting professionals.
The Arizona Registrar of Contractors is a state agency and serves two
core functions; licensing and regulation of the licensing of contractors.
Currently, there are approximately 38,000 licensed contracting entities in
the State of Arizona with 106 classifications ranging from landscaping and painting to general contracting and carpentry, remodeling and repairs.
The importance of a residential buyer or seller using a licensed contracting professional begins with the assurance that the work will be completed by an
individual with the knowledge and experience required to perform the work and
ends with their potential access to a restitution fund, known as the Registrar’s
Residential Recovery Fund, if the contracted-for work fails to meet professional industry standards.
As one can imagine, Arizona Revised Statutes and Rules related to contracting can intimately relate to the work
encountered by Arizona’s licensed real estate agents on a daily basis.
Though certainly not an exhaustive list, the Arizona real estate industry likely comes into contact with work impacted by ROC contracting licensure requirements, including ARS 32-1121(A)(14); ARS 32-1121(A)(5) & (A)(6); ARS 32
-1151; and ARS 32-1169.
The term handyman is one many use to generally mean an individual who can fix many, if not all, small projects
around the home. In Arizona, however, statute dictates the work allowed to be done by an unlicensed individual acting as a
handyman. Specifically, ARS 32-1121(A)(14), or the so-called “handyman exemption,” is as follows:
32-1121. Persons not required to be licensed; penalties; applicability
This chapter shall not be construed to apply to:
Any person other than a licensed contractor engaging in any work or operation on one undertaking
or project by one or more contracts, for which the aggregate contract price, including labor, materials and all other items, but excluding any electrical fixture or appliance that was designed by the
manufacturer, that is unaltered, unchanged or unmodified by any person, that can be plugged into a
common household electrical outlet utilizing a two pronged or three pronged electrical connector and
that does not use any other form of energy, including natural gas, propane or other petroleum or
gaseous fuel, to operate or is attached by a nail, screw or other fastening device to the frame or
foundation of any residential structure, is less than one thousand dollars. The work or operations that
are exempt under this paragraph shall be of a casual or minor nature. This exemption does not apply:
(a) In any case in which the performance of the work requires a local building permit.
(b) In any case in which the work or construction is only a part of a larger or major operation,
whether undertaken by the same or a different contractor, or in which a division of the operation is
made in contracts of amounts less than one thousand dollars, excluding any electrical fixture or
appliance that was designed by the manufacturer, that is unaltered, unchanged or unmodified by any
person, that can be plugged into a common household electrical outlet utilizing a two pronged or three
pronged electrical connector and that does not use any other form of energy, including natural gas,
propane or other petroleum or gaseous fuel, to operate or is attached by a nail, screw or other fastening
device to the frame or foundation of any residential structure, for the purpose of evasion of this chapter
or otherwise.
Continued on page 7
Real Estate Bulle n Page 6 Volume 2015 • Issue 4 Guest Article continued- The Arizona Registrar of Contractors
Licensing Requirements ...
(c) To a person who utilizes any form of advertising to the public in which the person's unlicensed
status is not disclosed by including the words " not a licensed contractor" in the advertisement.” (emphasis added)
According to the Arizona Republic, more homes were flipped in Maricopa County, AZ than anywhere else in the Nation between
April 2013 and March 2014.
Did you know there are specific licensure and statutory requirements addressing a property owner attempting to sell such property
after improving or building structures or appurtenances with the intent to sell. The specific statutes, ARS 32-1121(A)(5) & (6), are as
follows:
32-1121. Persons not required to be licensed; penalties; applicability
This chapter shall not be construed to apply to:
Owners of property who improve such property or who build or improve structures or appurtenances on such
property and who do the work themselves, with their own employees or with duly licensed contractors, if the
structure, group of structures or appurtenances, including the improvements thereto, are intended for occupancy
solely by the owner and are not intended for occupancy by members of the public as the owner's employees or
business visitors and the structures or appurtenances are not intended for sale or for rent. In all actions
brought under this chapter, except an action against an owner-occupant as defined in section 33-1002, proof
of the sale or rent or the offering for sale or rent of any such structure by the owner-builder within one year
after completion or issuance of a certificate of occupancy is prima facie evidence that such project was
undertaken for the purpose of sale or rent. For the purposes of this paragraph, "sale" or "rent" includes any
arrangement by which the owner receives compensation in money, provisions, chattels or labor from the
occupancy or the transfer of the property or the structures on the property.
Owners of property who are acting as developers and who build structures or appurtenances to structures on
their property for the purpose of sale or rent and who contract for such a project with a general contractor
licensed pursuant to this chapter and owners of property who are acting as developers, who improve structures
or appurtenances to structures on their property for the purpose of sale or rent and who contract for such a
project with a general contractor or specialty contractors licensed pursuant to this chapter. To qualify for the
exemption under this paragraph, the licensed contractors' names and license numbers shall be included in
all sales documents. (emphasis added)
Finally, licensed real estate agents often encounter questions surrounding the permitting of projects and whether a seller secured them
and whether a buyer needs to secure one for a project.
AZ ROC would recommend real estate agents be familiar with ARS 32-1121(A)(14)(a), ARS 32-1151 and ARS 32-1169 as they relate
to the need for a licensed contractor to perform work requiring a permit, the prima facie evidence of the existence of a contract when
permits are secured, and the need to list a licensed contractor when pulling a permit.
Just as for real estate, requirements for contractors are detailed, extensive and explicit in rule and by statute. If you have specific
questions regarding involvement you may have in any of the activities listed above, AZ ROC recommends consulting with an
attorney.
If you have questions regarding which licensed contractor you would suggest a buyer or seller to hire to complete a project, you can
refer them to the Contractor Search at AzROC.gov or 877.692.9762
Article provided by the Arizona Registrar of Contractors www.azroc.gov
Real Estate Bulle n Page 7 Volume 2015 • Issue 4 The Bank is the Subsequent Developer/Owner?
Banks as financial institutions do not typically “actively seek” to acquire property for sale or lease in subdivisions and therefore are not held accountable for property reverting back to banks when the property has been
split over the threshold of lots over the years. This Bulletin article is not a substantive policy statement, but a
communication from the ADRE to the public to communicate issues that may be impacted by statutes or regulations which the Department is responsible to enforce.
EXCEPTION FROM THE ACT OF CREATING SIX OR MORE LOTS...
Pursuant to A.R.S. § 32-2181(E)(2) when lots, parcels or fractional interests are the result of any of the following three actions: 1) a foreclosure sale, 2) the exercise of a trustee under a deed of trust of a power of sale or 3)
the grant of a deed in lieu of foreclosure, the subsequent owner (bank) is only afforded an exception from the
act of “creating” six or more lots, parcels or fractional interests in improved or unimproved land, lots or parcels
of any size not the “sale or lease” of those lots or parcels. The financial institution must also be in compliance
with all other applicable state and local government requirements.
EXEMPTIONS TO SELL AND LEASE INDIVIDUAL LOTS/PARCELS
A.R.S. § 32-2181(E)(2) does not provide banks as financial institutions to be exempt to “sell or lease” individual lots without a public report. Exempt sales and leases are further described in A.R.S. § 32-2181.02 which are
typically by operation of law (self-determining) exemptions and may be options that the financial institution
decides to pursue. Those options may include, but are not limited to:
 Bulk sale. A.R.S. § 32-2181 (A)(1)
 Sale or lease of lots or parcels of 160 acres or more. A.R.S. § 32-2181 (A)(2)
 Sale or lease of parcels, lots units or spaces that are zoned and restricted to commercial or industrial
uses. A.R.S. § 32-2181 (B)(1)
Two other exemptions to “sell or lease” individual lots or parcels that may be determined upon application to
ADRE are the Subsequent Owner Exemption pursuant to A.R.S. § 32-2181.02(B)(2) and the Special Order of
Exemption pursuant to A.R.S. § 32-2181.01.
The Subsequent Owner Exemption applies to a subdivision with an existing Subdivision Public Report that has
been issued within the past five years that is not subject to amendment or the subsequent owner obtaining a new
public report.
The Special Order of Exemption applicant would need to demonstrate, satisfactory to the commissioner, that
compliance with the provisions of the Article is not essential to the public interest or for the protection of buyers by reason of special characteristics of the subdivided lands or fractional interests therein or the limited character and duration of the offer for sale, lease or financing or the special characteristics or limited number of
fractional interests.
INVESTOR/DEVELOPER
Investors generally deal with two types of properties: Tax Lien Purchases and Tax Lien Foreclosures. Investors
are not considered a bank as a financial institution and typically actively seek to acquire ownership of lots/
parcels to sell property for a better return on their investments similar to any other small or large developer in
Arizona.
If a subdivider, owner or investor owning more than 5 properties uses an exemption for which they are not
qualified, they may be charged in violation of A.R.S. § 32-2181(A), 32-2183 (F) and (M) and any other violation of statue or rule that may apply. Further, a cease and desist order may be issued pursuant to the Article of
Arizona Revised Statutes.
Real Estate Bulle n Page 8 Volume 2015 • Issue 4 ADRE LEGISLATIVE UPDATE
National Do Not Call Registry
Before making calls to consumers do you or your company verify the number you’re calling is not registered on the National Do Not Call Registry? Here are some FAQ’s from the Federal Trade Commission
(FTC) - (The government agency that protects consumers). More information is available at: https://
www.ftc.gov
What is the National Do Not Call Registry?
The National Do Not Call Registry is a list of phone numbers from consumers who have indicated their preference to
limit the telemarketing calls they receive. The registry is managed by the Federal Trade Commission (FTC), the nation’s
consumer protection agency. It is enforced by the FTC, the Federal Communications Commission (FCC), and state
officials.
What calls are covered?
The do not call provisions of the Telemarking Sales Rule (TSR) cover any plan, program or campaign to sell goods or
services through interstate phone calls. This includes calls by telemarketers who solicit consumers, often on behalf of
third party sellers. It also includes sellers who are paid to provide, offer to provide, or arrange to provide goods or services to consumers.
What types of calls are not covered by the National Do Not Call Registry?
The do not call provisions do not cover calls from political organizations, charities, telephone surveyors, or companies
with which a consumer has an existing business relationship.
How does the established business relationship provision work for a consumer whose number is on the
registry?
A company with which a consumer has an established business relationship may call for up to 18 months after the
consumer’s last purchase or last delivery, or last payment, unless the consumer asks the company not to call again. In that
case, the company must honor the request not to call. If the company calls again, it may be subject to a fine of up to
$16,000.
If a consumer makes an inquiry or submits an application to a company, the company can call for three months. Once
again, if the consumer makes a specific request to that company not to call, the company may not call, even if it has an
established business relationship with the consumer.
A consumer whose number is not on the national registry can still prohibit individual telemarketers from calling by
asking to be put on the company’s own do not call list.
How can I access the registry to verify?
The registry can be accessed only through the fully automated and secure website at www.telemarketing.donotcall.gov.
The first time you access the registry, you must set up a profile and provide identifying information about you and your
organization. If you are a telemarketer or service provider accessing the registry on behalf of your seller-clients, you will
be required to identify your seller-clients and provide their unique Subscription Account Numbers (SANs). The only consumer information available from the registry is telephone numbers. After you (or the company telemarketing on your
behalf) have accessed the registry and downloaded telephone numbers the first time, you’ll have the option of
downloading only changes in the data that have occurred since the last time you accessed the registry.
Real Estate Bulle n Page 9 Volume 2015 • Issue 4 WHAT’S HAPPENING AT ADRE?
In keeping with Governor Ducey’s launch of Lighting Arizona Purple, showing Arizona’s dedication
to ending Domestic Violence, ADRE ‘LIT UP PURPLE’ on October 22, 2015. Staff was challenged to
see who could get on the most purple and help spread the word!
Pictured below, Commissioner Lowe and ADRE staff decked out in purple.
Staff Training and Quarterly Employee Meetings
Monthly Staff Training Continues at ADRE!
September staff learned about the FBI Mortgage
Fraud Task Force.
 October brought a session on Change Management
with a session centered around the ‘Who Moved
My Cheese’ theme, and
 November staff heard from the Designated Broker
of a large brokerage about ‘How a Large Brokerage Works’.

ADRE staff at the recent Quarterly Staff
Birthday Celebration. July, August and September birthdays were celebrated.
Real Estate Bulle n Page 10 Volume 2015 • Issue 4 LICENSING STATS
Real Estate Bulle n Page 11 Volume 2015 • Issue 4 DEVELOPMENT INDUSTRY LEARN & LUNCH
The third Learn and Lunch (L&L) with ADRE’s Development/Builder Services Division and
the Development / Builder Industry was another success. There was positive dialogue amongst the
participants, which included over 30 industry representatives.
At this event the Home Builders Association of Central Arizona was represented by Jim Sorgatz, Vice President of
Member Services and Jackson Moll, Vice President of Municipal Affairs who provided great overview, pertinent
building trends and statistics, as well as a Q&A session.
ADRE provided a short oral quiz on various exemptions.
ADRE would like to give special thanks to Title Security Agency for
sponsoring the delicious meal!
The next L&L event is tentatively scheduled for January 21, 2016. Representatives
from the development industry are welcome to attend; due to limited seating
and to receive a detailed invitation, please pre-register through the ADRE
Message Center on the home page at www.azre.gov
EDUCATION UPDATE
EDUCATION FACTS! Average Passing Percentages for "First Time Exam Takers" EXAM TYPE Aug‐2015 REAL ESTATE BROKER 80% Sep‐2015 70% Oct‐2015 63% 62% N/A 66% N/A CEMETERY SALESPERSON 25% 89% MEMBERSHIP CAMPING BRO‐
KER N/A N/A MEMBERSHIP CAMPING SALES‐
PERSON N/A N/A Total Number of Licensees (Individual and En ty) as of November 2, 2015 78,267 Ac ve Con nuing Educa on (CE) Courses as of November 2, 2015 100% REAL ESTATE SALESPERSON CEMETERY BROKER 63% 0% N/A N/A Live CE (Approximately) 2,380 Distance Learning CE (Approximately) 293 ADRE Licensee Online CE Course Submissions July 22, 2015 through November 1, 2015 Total courses entered Distance Learning 57797 30229 Percentages Distance Learning Real Estate Bulle n 52 Page 12 Volume 2015 • Issue 4 AUTOMATIC RENEWAL OF
PROPERTY MANAGEMENT AGREEMENTS
The Arizona Revised Statutes governing real estate activity require a Property Management Agreement (“PMA”) to
“specify a beginning and an ending date.” [A.R.S. § 32-2173(A)(1)(a)]
The automatic renewal of a PMA is allowed pursuant to A.R.S. § 322173(A)(2)(a), which states:
The property management agreement may “contain an automatic renewal provision, if the property management firm sends the owner a reminder
notice at least thirty days before the renewal date.”
The requirement to send a thirty-day reminder notice to the property
owner applies equally to all management agreements containing an automatic
renewal clause, including agreements being automatically renewed on a monthto-month basis.
The Department’s Auditing staff has found all brokers are not routinely sending thirty-day reminder notices to
owners, especially in the case of month-to-month renewals. The Auditing staff has also found many thirty-day notices are
not sufficient to document such notices have been provided to the owner.
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ADRE recommends the thirty-day reminder notices include:
The date sent to the property owner, in order to document compliance with the 30-day requirement;
The identity of the person receiving the notice;
If multiple properties are being managed for the same owner, the address of the rental property(s) covered by the
Automatic renewal; and,
The date the current PMA renewal period ends.
A copy of the thirty-day reminder notice should be placed in the property management file for the PMA being
automatically renewed.
While the property management firm is required to send thirty-day reminder notices prior to automatically renewing
a PMA, the property owner is not required to respond to the reminder notice received.
Real Estate Bulle n Page 13 Volume 2015 • Issue 4 WHEN DOES GOOD CUSTOMER SERVICE BECOME
PROPERTY MANAGEMENT??
A Scenario and Answer to think About…
A real estate licensee assists a buyer in purchasing a residential investment property. After close of escrow, the
buyer, now property owner, asks the licensee to advertise the property for rent and secure a tenant. A listing agreement is
signed with the owner for the express purpose of renting the property. The owner, who lives out-of-state, indicates his/her
intention to “self-manage” the property.
When the licensee contacts the owner to report a potential tenant has been secured, the owner asks the licensee for
some assistance since the owner resides out-of-state. The licensee agrees to assist the client in hope of representing the
owner again in the future or receiving referrals.
The licensee agrees to:
 Collect the rent each month and forward the funds to the owner.
 Be the point of contact for the tenant should any repairs be required.
 Arrange for repairs to be completed by a handyman or contractor.
 Perform routine property inspections on the owner’s behalf.
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Send a five-day notice regarding non-payment of rent.
Even though the licensee had no intention of becoming the “property
manager” for the property, the line has been crossed from lending assistance to performing property management services.
Through the licensee’s actions, both the tenant and owner perceive the licensee to be the property manager. In
some cases, the services are provided without the knowledge and/or consent of the employing broker and without a signed
property management agreement between the broker and the owner.
If this situation presents itself, the real estate licensee should first discuss the client’s requests with their
Designated Broker before agreeing to provide the requested services.
Continuing Education (CE) TIPS!
What is a "CE period?"
Original licenses and renewals are issued for a two (2) year period. A salesperson or broker must submit 24 credit hours
of continuing education (CE) EVERY 24 MONTHS. Designated brokers and associate brokers with delegated authority
to review and initial contracts or similar instruments must submit 30 credit hours of CE EVERY 24 MONTHS.
What happens if I make a mistake while entering information about my courses?
If you enter a course number in error (the wrong course number, the wrong CE period, etc.) contact the Department at
http://www.azre.gov/Contacts/EmailAdre.aspx.
I only do commercial business. Do I need to take a Fair Housing class?
If your business is exclusively commercial properties and you are claiming a substitute for the Fair Housing requirement,
YOU MUST CONTACT THE DEPARTMENT AT http://www.azre.gov/Contacts/EmailAdre.aspx BEFORE RENEWING YOUR LICENSE.
After I complete my CE for one period can I start classes for the next CE period?
The law requires 24 hours of continuing education (CE) credits be taken DURING each 24 month period of licensure. For
example, if you are licensed from 4/1/2014 to 3/31/2016 you must take 24 hours of CE between those dates and may
begin taking CE for the next two year period on or after 4/1/2016.
Real Estate Bulle n Page 14 Volume 2015 • Issue 4 HOME STAGING OR PROPERTY MANAGEMENT
According to Wikipedia, “Home Staging is the act of preparing a private residence for sale in the real estate marketplace. The goal of staging is to make a home appealing to the highest number of potential buyers, thereby selling a property more swiftly and for more money.” Pursuant to the Arizona Revised Statutes, A.R.S. § 322101.48, Home Staging in the traditional sense does not meet the statutory definition of real estate activity.
Property management services are being performed if a home is staged using people occupying a home with their
personal possessions. The performance of property management services requires a current and active real estate
license on the part of both the company and persons providing the services.
In the past few years, the Department has become aware of several unlicensed companies advertising as providing
home staging services using people and their personal possessions as props. In these cases:
 The unlicensed company often seeks to align themselves with an Arizona real estate licensee.
 The unlicensed company offers “Free Home Staging” to the property owner or real estate licensees.
 The unlicensed company enters into a contract with the property owner and the persons occupying the
Property.
 The company fails to inform the property owner that the company is being compensated through fees charged
to the people occupying the owner’s property.
 The company refers to the people residing in the homes as “care takers,” “home managers,” “home tenders” or
similar terms.
The Tenants:
 Undergo background checks, pay deposits to move into a property, as well as fees to occupy the home
that are charged on a daily, weekly or monthly basis.
 May be required to place the utilities in their name; pay the cost of maintaining the home; carry a minimum $1,000,000 liability policy; or, pay the property owner’s HOA dues.
If the Tenants purchase the home or enter into a long-term lease with the property owner, the property owner may
be required to pay the unlicensed company a minimum “two-month lease term.”
If a real estate licensee is considering being involved in this type of real estate activity, the licensee should speak
with their Designated Broker and possibly seek legal advice before proceeding. A licensee may conduct real
estate activity only on behalf of their employing broker and may not work outside of that employing broker.
Real Estate Bulle n Page 15 Volume 2015 • Issue 4 BROKERS IN SUBSTANTIVE COMPLIANCE
Audit Honor Roll– July through September, 2015
ABBREVIATIONS USED IN SUBSTANTIVE COMPLIANCE
EBAR -= Electronic Broker Audit Review
Real Living Property For You Audit Type Onsite Peoria Brown, Charles A. Transcity Property Management, Inc. Onsite Mesa BR553489000 Cochran, Ryan K. Kitchell Development Company Onsite Phoenix BR525888000 Dawson, Rodney B. ACM LLC (Arizona Commercial Management) Onsite Phoenix BR004695000 Earle, Rock L. Coldwell Banker Rox Realty Onsite BR006751000 Egan, James M. Prime Proper es Onsite Casa Grande Tucson BR035336000 Falbo, Jay P. Eagle Commercial Realty Services Onsite Phoenix BR111632000 Germain, Steven K. Adobe Valley Reloca ng Services, LLC Onsite Phoenix BR637966000 Graulty, Patricia A. Sample Realty Investment & Trust Co. Onsite Tucson BR568562000 Harp, Darwyn Hines GS Proper es, Inc. Onsite Phoenix BR111427000 Hendrickson, Jared C. Caliber Realty EBAR Sco sdale BR004938000 Horvath, James G. Town West Realty, Inc. Onsite Tucson BR011517000 Hyndman, Gareth Hanover Management Onsite Phoenix BR648531000 Kipuros, Steve Jr. Sinmar Realty, LLC Onsite Phoenix BR002953000 Klugman, Eddie L. E. K. Corp Onsite Sco sdale BR572396000 Lagneaux, Ode e AZ Equity Proper es Onsite Sco sdale BR641603000 Larson, Brenda L. Abbey, Inc., DBA VHM & Realty Onsite Mesa BR030566000 Liberty, Joseph D. Liberty Southwest Realty, LLC Onsite Glendale BR032862000 Link, Laura A. Canyon Ridge Realty, LLC Onsite Mesa McCarthy Cook & Co. Onsite Phoenix License # Broker's Name Brokerage BR523321000 Ashker, William F. BR012841000 BR520668000 Mayes, Patricia "Pa y" L. City BR542920000 McCall, Michael J. Infoclosure Onsite Mesa BR528772000 McCaughey, Bradley J. Return Realty Onsite Peoria BR561948000 McIntyre, Tasha Y. Family First Real Estate Services, LLC Onsite Flagstaff BR107568000 McMath, Weldon L. McMath Realty, LLC Onsite Phoenix BR012170000 Meredith, James "Jim" Jim Meredith Realty Onsite Phoenix BR026451000 Meyer, John Arizona Property Specialists Onsite Sco sdale Real Estate Bulle n Page 16 Volume 2015 • Issue 4 AUDIT HONOR ROLL
BROKERS IN SUBSTANTIVE COMPLIANCE
continued...
BR005257000 Moore, William M. Biltmore Proper es, Inc. Onsite Phoenix BR556219000 Paffrath, Lisa A. Grand View North Realty Onsite Flagstaff BR573712000 Ray, Kathleen "Kat" L. Apartment Management Consultants, LLC Onsite Mesa BR507781000 Ricks, David R. Farnsworth‐Ricks Management and Realty, Inc. Onsite Mesa BR022854000 Riley, Ann E. Ryan Companies US, Inc. Onsite Phoenix BR108060000 Rooney, Joseph W. RT Brokerage Services Onsite BR526998000 Sarabia, Michael A. Desco Southwest Onsite Litchfield Park Tucson BR008787000 Swallows, Gary Swallows and Associates Realty, Inc. Onsite Glendale BR116460000 Waite, Joseph A. Applied Real Estate Services Onsite Gilbert BR026326000 White, Raymond R. 1st USA Realty Professionals Onsite Mesa DISCIPLINARY ACTIONS
ABBREVIATIONS USED IN DISCIPLINARY ACTIONS
1. LG = License
Granted
2. C&D = Cease and
Desist
3. CFO = Commissioner
Final Order
4. ASA = Accelerated
Settlement Agreement
5. CO = Consent
Order
6. CP = Civil
Penalty
7. PL = Provisional
License
8. PM = Practice
Monitor
9. BA = Broker
Acknowledgement
10. ED = Additional
Education
Name License Number Brokerage at me of viola on Loca on Summary 11. J&S = Joint &
Severally
Order Al‐Saadi, Lakisha SA568061000 Candidate Glendale Denial of license; previously CFO; Denial revoked. upheld. Baugh, Patricia SA631050000 Realty One Group Phoenix Late disclosure Misdemeanor convic on for Reckless Driving. Blum, Susan SA657021000 Diamond Resorts Interna onal Mar‐
ke ng Sco sdale 2015 Misdemeanor convic on CO; 2 yr. PL w/ disorderly conduct; prior PM and qtly statements. misdemeanor convic ons for DUI; and obstruc ng a peace officer. Brown, Amy SA642115000 Delex Realty Sco sdale Conduc ng property manage‐ CFO; Revoca on, ment ac vity without knowledge $6,000 CP. of employing broker; failure to remit client funds; failure to place client funds in a trust ac‐
count; commingling. Real Estate Bulle n Page 17 ASA; $750 CP. Volume 2015 • Issue 4 DISCIPLINARY ACTIONS CONTINUED
Name License Number Brokerage at me of viola on Loca on Burgueno, Catherine SA547373000 Americana Arizona, Phoenix LLC dba Berkshire Hathaway Hom‐
Services AZ Proper‐
es Cas llo‐Wilson, Eric SA660224000 Candidate Gilbert Chilton, Joshua SA658823000 Candidate; Cemetery Sales Phoenix Clark, Trey SA523359000 No. Arizona Real Flagstaff Estate Services LLC Cli on, Kimberly BR111456000 Tierra An gua Realty Cruz, John SA656968000 Candidate Desert Mountain Brokers LLC Summary Order Hired someone to com‐
90 day license plete their con nuing ed‐ suspension, uca on. $4,000 CP, Provisional with PM, 24 hr. addi onal CE. CO; 2 yr. PL w/ Texas Peace Officer license revoca on for PM, and qtly false report. statements. Convic ons: prior CO; 2 yr. PL w/ convic ons including 2 PM and qtly shopli ing; possession of statements. drug paraphernalia. Late disclosure misde‐
meanor DUI convic on. ASA; $750 CP. Failure to supervise; allowing a person to conduct real estate ac vi es with expired license. Queen Creek 2009 convic on for possession of a forgery device, 2012 exceeding speed by 20/45. ASA; $200 CP. CO; PL; 2 yr. w/ PM; and mandatory qtly reports. LC650757000 Sedona Property Management viola ons, trust account shortage C&D Desert Summit Management & Maintenance Corp. CO585646000 New River Property Management viola ons, trust account shortage CFO; License previously revoked; CP $2,500. Dziedzic, David BR521660000 Realcore Realty LLC Sco sdale dba Na onal Rental Pros Evans, Regin SA657990000 Candidate Tucson Phoenix CO; PL 2 yr. w/
monthly & qtly reports, $30K surety bond, 12 hours ED, $6,000 CP 2014 Misdemeanor for CO; 2 yr. PL w/ solicita on to commit for‐ PM and qtly gery; 2012 Misdemeanor statements. Property Management viola ons, trust account shortage DUI convic on. Freiholtz, Eric Real Estate Bulle n SA634742000 Ahwatukee Realty & Ahwatukee Property Management Page 18 Surrendered in Lieu of disciplinary hearing. Surrender of License. Volume 2015 • Issue 4 DISCIPLINARY ACTIONS CONTINUED
Name Fuenning, W. Sco License Number Brokerage at me of viola on SA541233000 Homesmart LLC Loca on Sco sdale Furrey, Norman Show Low BR110766000 RE school instructor #I99‐0126 Garre , James Unlicensed U S Vaca on Des na ons Summary Fraud and conversion Order CFO; Revo‐
ca on of License Failure to request exemp on before claiming own classes taught as CO; ED 9 hrs. credit for con nuing educa on. Charleston Unlicensed Ac vity C&D CO; $3,000 CP;, 2 yr. PL w/ mandato‐
ry qtly re‐
ports, 12 hours of ED. Gizzo, Dale SA539689000 Prosmart Realty Gilbert Receiving compensa on from other than employ‐
ing broker. Guess, Camille BR638735000 Inac ve Sco sdale Late disclosure of Revoca‐ CO; 2 yr. PL; on of California Broker's $2000 CP; license. 12 hours ED. CO; 2 yr. PL, monthly & qtly reports, surety bond, 18 hours ED, $5,000 CP. Harper, Jill BR101643000 JAS United dba Proagent Realty Tempe Property Management viola ons, trust account shortage Hoffman, Michael SA657103000 Candidate Sco sdale Denial of license; failed to CFO; Denial appear at hearing. upheld. Horizon Property Man‐
agement LLC LC555329000 Tucson Property Management viola ons, trust account shortage Humphrey, Carmen SA542296000 3CB Investments LLC Peoria Jacob, Eric SA657225000 Candidate El Mirage JAS United dba Proagent LC646229000 Realty King, Karen Real Estate Bulle n BR545031000 Horizon Property Management LLC Page 19 Late disclosure Misde‐
meanor convic on for speeding 20/45. Denial of License; numer‐
ous prior convic ons for assault, DUI, trespass, reckless driving and proba‐
on viola on. CFO; Revo‐
ca on of License ASA; $750 CP. CFO; Denial upheld. Tempe Property Management viola ons, trust account shortage CO 2 yr. PL, monthly & qtly reports, surety bond, 18 hours ED, $5,000 CP. Tucson Property Management viola ons, trust account shortage CFO; Revo‐
ca on of license, $3,000 CP. Volume 2015 • Issue 4 DISCIPLINARY ACTIONS CONTINUED
Name Brokerage at me of viola on License Number Loca on Summary Order Kirby, Chris na Desert Summit Management BR584489000 & Maintenance Corp. Klinger, Garry Unlicensed Kokoszka, Gerald BR014107000 Self‐employed Felony convic on for Henderson, NV Structuring Financial Transac ons Summary Suspen‐
sion and request for hearing to revoke license. Kovacs, Caroline SA536085000 Gehan Homes of Arizona Tempe Unlicensed Ac vity CO, $400 CP, 12 hours ED. Lee, Amber SA637869000 Gehan Homes of Arizona Tempe Unlicensed Ac vity CO $750 CP, 12 hours ED. Lemahieu, Steve Sco sdale SA538216000 Smart Referral Net‐
work LLC Late disclosure of surren‐ CO; $400 CP; 2 yr PL; der of license to Board of 12 hours ED. Pharmacy. Lionsgate Proper es Unlicensed Sahaurita Unlicensed Ac vity C&D Lomax, Timothy Unlicensed Lionsgate Proper es Sahaurita Unlicensed Ac vity C&D Love, Stephanie SA531059000 Homesmart LLC Luce, Robert Luce Signature Prop‐ Buckeye BR546404000 er
es Class 4 Felony DUI. McKallor, Jon es & SA016189000 CDN Proper
Investment Phoenix Surrender in lieu of disci‐
plinary hearing. Cease & Desist Order and Surrender of License. Montano aka Rivas, Le cia BR534917000 Sol Realty LLC Phoenix Felony convic on for Conspiracy to Harbor Illegal Aliens . Order of Summary Suspension. Munro, Cameron Gehan Homes of BR636321000 Arizona Tempe Failed to supervise. ASA; $750 CP. Nilson, Stacey Tucson SA556106000 Bluebonnet Ventures LLC Late disclosure of misdemeanor criminal damage convic on. ASA; $750 CP Noles, Hillary SA660266000 Candidate Phoenix Disclosure of 2 Misde‐
meanor breach or peace convic ons. CO; 2 yr. PL granted; PM and qtly statements. Parson, Susan SA654315000 EXP Realty LLC Presco Late disclosure DUI con‐
vic on. ASA; $400 CP. Peterson, Erik Desert Mountain BR521957000 Brokers LLC Sedona Property Management viola ons, trust account shortage C&D Real Estate Bulle n New River Lionsgate Proper es Sahaurita Sco sdale Page 20 Property Management viola ons, trust account shortage CFO; License previously revoked. $2,500 CP. Unlicensed Ac vity C&D Felony convic on for Aggravated DUI Summary Suspension; request for hearing to revoke license. CFO; Revoca on of License following a Summary Suspension. Volume 2015 • Issue 4 DISCIPLINARY ACTIONS CONTINUED
Name License Number Brokerage at me of viola on Loca on Order Receiving compensa on CO; $3000; 2 yr. from other than employ‐ PL, qtly affidavits, 12 hours ED. ing broker. Porter, Kelly SA106618000 Dominic & Co. Rathjen, Audrey Sco sdale SA542783000 DPR Referral Network LLC Late disclosure Misdemeanor convic on ASA; $750 CP. for Compounding. Reese, Donovan Renters Ware‐
BR567513000 house Phoenix Paid compensa on to an CO; $6,000 CP, unlicensed person; failure 2 yr. w/ PL,; to supervise. 9 hours ED. Sco sdale CO; $6,000 CP, Receiving compensa on in mandatory viola on; misleading Qtly Reports, informa on; addi onal failure to supervise. 18 hours ED. Sco sdale 2014 felony convic ons for a empted sale or transpor‐ CFO; Revoca on ta on of Marijuana; of License a empted possession of Marijuana. Scappa cci, Dominic BR015514000 Dominic & Co. Sco sdale Summary Scheiner, mark SA634201000 Inac ve Shapiro, Charles Coldwell Banker SA544422000 Residen al Sun City Brokerage Failure to disclose convic ons from 1977. ASA; $1,500 CP. Shaw, Becky SA521791000 Homesmart LLC Phoenix Late disclosure of a misdemeanor DUI convic on. ASA; $400 CP. Mesa Prior convic ons, 2010 felony for Manufacture/
deliver Cannabis; 2009 misdemeanor: conspiracy to possess a controlled substance. CO; 2 yr. PL w/ PM; mandatory qtly reports. Property Management viola ons, trust account shortage CFO; Revoca on, $6,000 civil penalty. Shoger, Greg SA656044000 Candidate Silverman, Jeremy on Realty Tucson BR562851000 Transac
LLC Strong, Nicole SA625642000 Candidate Previous license expired Presco Valley with an outstanding consent order. SA652766000 Candidate CFO; affirming Administra ve Law Judge ruling to License denied for Retail San Tan Valley The convic ons. uphold Department's denial of license. Tokarski, Roxanna Real Estate Bulle n Page 21 CO; 1 yr. PL w/ PM, qtly reports. Volume 2015 • Issue 4 DISCIPLINARY ACTIONS CONTINUED
Name Brokerage at me of viola on License Number Loca on Summary Order Tomaszewski, Eliot SA575919000 Keller Williams Arizona Realty Sco sdale Accep ng compensa on from other than employing CO; 30 day broker; license adver sing viola ons; Suspension, failure to promptly $5,000 CP, 2 respond to a Department yr. PL, manda‐
inves ga on, accep ng tory qtly re‐
ports, 18 hours compensa on for loan ED. nego a on. Transac on Realty LC635640000 LLC Tucson Property Management viola ons, trust account shortage Transier, Thomas Felony convic ons in 1973 (possession of cannabis) CO; 2 yr. PL w/ PM, and qtly Presco Valley and 1974 statements. (burglary). SA657521000 Candidate U S Vaca on Unlicensed Des na ons Valdez, Robert Charleston, SC Unlicensed Ac vity BR566105000 Inac ve Phoenix Late disclosure DUI con‐
vic on. CFO; Revoca‐
on C&D ASA; $750CP. Verska, Eric SA659812000 Candidate Sco sdale CO; 2 yr. PL w/ PM; man‐
datory Felony convic ons, possession of drugs 2004, a endance fraudulent schemes 2004 at support and forgery 2006. group/
counseling sessions. Weaver, Noel SA578498000 Inac ve Phoenix Late disclosure of an adverse judgment. Webster, Heather SA640266000 Inac ve Glendale Late disclosure Misde‐
meanor convic on for dis‐ ASA; $750.CP. orderly conduct. Weisser, Timothy Phoenix 2004 The /forgery convic on. CO; 2 yr. PL w/ PM and qtly statements. Presco Late disclosure of misdemeanor li ering convic on. ASA; $400 CP. Late disclosure DUI con‐
vic on. ASA; $750 CP. SA658717000 Candidate Realty Execu ves Yannitelli, Nicholas SA646248000 Northern Arizona Zeitlin, David Real Estate Bulle n Enterprises Phoenix SA506167000 Merri
Inc. Page 22 ASA; $750 CP. Volume 2015 • Issue 4 ADRE CALENDAR OF EVENTS
HOLIDAYS
ADRE will be closed on Veterans Day, Wednesday, November 11, 2015,
Thanksgiving Day, Thursday, November 26, 2015, Christmas Day, Friday,
December 25, 2015, and on New Years Day, Friday, January 1, 2016
ADVISORY BOARD MEETING
The next Real Estate Advisory Board meeting will be December 2, 2015 in the
Commissioner’s Conference Room
Arizona Department of Real Estate,
2910 N. 44th Street, Phoenix, Arizona 85018.
All members of the public are welcome to attend.
EDUCATION ADVISORY COMMITTEE
The next Education Advisory Committee meeting will be December 8, 2015 in the
Commissioner’s Conference Room
Arizona Department of Real Estate,
2910 N. 44th Street, Phoenix, Arizona 85018
All members of the public are welcome to attend.
LUNCH AND LEARN
The next Learn and Lunch meeting will be January 21, 2016 in the third floor
Training Room.
Arizona Department of Real Estate,
2910 N. 44th Street, Phoenix, Arizona 85018
See page 12 for registration information
Real Estate Bulle n Page 23 Volume 2015 • Issue 4 Official Publica on ARIZONA DEPARTMENT OF REAL ESTATE 2910 N. 44th St, Suite 100 Phoenix, Arizona 85018 VOLUME 2015 ‐ ISSUE 3 The Periodic Bulle n from the Arizona Department of Real Estate An official publica on of the
State of Arizona
DOUGLAS A. DUCEY Governor JUDY LOWE Commissioner Real Estate Advisory Board Kimberly Cli on, Chair Frank Dickens, Vice ‐ Chair Karen Bohler Carla Bowen Charles Bowles Bill Gray Nedra Halley Dus n Jones Sco Peterson Jo Ann F. Sabbagh Real Estate Bulle n Page 24 Volume 2015 • Issue 4